AMD in Emergency Due to Unexpected Explosive Demand..."Confident of Exceeding 70% Annual CPU Growth"

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AMD is facing a supply shortage due to an unexpected surge in demand for server Central Processing Units (CPUs). The company expressed confidence that its server CPU business would achieve an annual growth rate exceeding 70%.

According to Benzinga on August 5 (local time), AMD Chair and CEO Lisa Su stated in the Q2 earnings announcement that the server CPU supply chain remained tight in the first half of this year. Su said, "The current server CPU supply chain is tight," adding, "The difficult situation persisted as we did not anticipate a significant portion of the demand."

Su predicted that the supply situation would improve in 2027 as customer demand could be more accurately anticipated. He stated, "Demand forecasting capabilities will improve in 2027," and "We expect the server supply situation in 2027 to be better than in 2026." It was reported that many customer contracts include one-year supply agreements.

AMD expressed strong confidence in the possibility of achieving over 70% year-over-year growth in its server CPU business. Su stated, "We view our ability to meet growth expectations very positively," and "There are also opportunities for growth rates to be even higher depending on future circumstances." The CPU supply shortage from Intel (Intel, INTC) and AMD has also increased the burden on PC and server manufacturers experiencing memory supply difficulties.

AMD's Q2 revenue was $11.54 billion, surpassing Wall Street's forecast of $11.28 billion. Adjusted earnings per share were $1.66, exceeding the estimated $1.61. AMD projected Q3 revenue to be in the range of $13 billion, plus or minus $300 million, setting a higher target than the market's expectation of $12.52 billion.

The projected adjusted gross margin for Q3 is approximately 56%, similar to Q2. AMD's stock price closed up 7% at $518.58 in regular trading, but fell 8.8% to $472.94 in after-hours trading following the earnings announcement.

[Article Summary]

-AMD stated that the server CPU supply chain is tight due to stronger-than-expected demand.

-Lisa Su projected that the supply situation would improve in 2027 and that the server CPU business growth rate would exceed 70%.

-Q2 earnings and Q3 revenue forecasts exceeded market expectations, but after-hours stock price fell by 8.8%.

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